Thu, Nov. 12, 6:13 AM
Wed, Nov. 11, 5:53 PM
- UBS oil services analyst Angie Sedita cautions that 2016 will remain difficult in the industry, especially for offshore drillers, but she awards Buy ratings to three leading land drillers, noting that pricing weakness will remain a struggle but that land drillers typically lead the sector off the bottom.
- The firm says Helmerich & Payne (NYSE:HP), Nabors Industries (NYSE:NBR) and Patterson-UTI Energy (NASDAQ:PTEN) have the potential to bring patient investors solid returns in 2016 and beyond.
- None of the offshore drillers gain Buy ratings from Sedita and her team.
Wed, Nov. 11, 5:30 PM
Wed, Sep. 2, 2:18 PM
- Helmerich & Payne (HP -3.2%) is downgraded to Underperform from Market Perform with a $48 price target, lowered from $55, at BMO Capital, citing lower estimates and downside risk.
- Similar to offshore drillers, HP's 2016 earnings are benefiting from contracts signed at the peak of the market, BMO says, estimating that 61% of HP's rigs are contracted at rates 33%-50% above the current spot market in 2016, which would be a material headwind for three years.
- The firm also sees a risk of a dividend reduction at HP due to slightly negative cash flow over the next few quarters.
Mon, Aug. 3, 2:58 PM
- Helmerich & Payne (HP -0.8%) is upgraded to Accumulate from Neutral with a $65 price target at Global Hunter, which suggests "judiciously" building a position as the stock is trading at two-and-a-half-year lows.
- Land drillers tend to be early beneficiaries of cyclical recoveries, and Hunter continues to believe a U.S. onshore recovery is intact, beginning in 2016; however, the firm's views are tempered as consensus estimates suggest earnings risk on term-to-spot mix shift headwinds and an industry challenged by increased E&P rig efficiency and an 1,00-plus+ idle rig overhang.
Thu, Jul. 30, 6:11 AM
Fri, Jul. 17, 11:32 AM
- Offshore drillers are significantly underperforming the broader market following cautious commentary from Schlumberger (SLB -0.1%) despite its Q2 earnings beat, a contract termination and an analyst downgrade.
- On its earnings call this morning, SLB said it expects little improvement in pricing levels in the near future and declines in activity for offshore drillers, while land rigs provide a more attractive opportunity and better margins.
- For its Q3, SLB foresees a further 5%-6% decline in Q/Q revenue as well as lower EPS, and says the $0.77 consensus is a realistic number.
- Yesterday, ConocoPhillips (COP -1.8%) said it plans to cut future deepwater exploration spending, particularly in its operated Gulf of Mexico program; in light of the decision, COP is terminating a contract for an Ensco (ESV -4.9%) deepwater drill ship.
- Also, UBS today downgraded National Oilwell Varco (NOV -1.5%) to Sell from Neutral.
- SDRL -6.4%, RIG -4.7%, RDC -6%, DO -3.3%, ATW -4.2%, HP -1.2%, PTEN -1.2%, PACD -5.7%.
Thu, Jul. 9, 3:26 PM
- The tide is finally starting to turn for global oil services stocks (NYSEARCA:OIH), Morgan Stanley says, now seeing a very favorable risk/reward balance for investors and up to 60% upside in the space over the next 6-9 months with only ~10% downside risk.
- The firm says it begins to see signs that global oil production is getting under control, as U.S. rig counts appear to have stabilized well below the level necessary to sustain production and Brazil production was recently revised well below consensus expectations.
- Stanley's top pick in the group is Schlumberger (SLB +1.1%), and it also likes Core Labs (CLB +2.2%), Frank's International (FI +1.5%), Patterson-UTI (PTEN +2.7%), Nabors Industries (NBR +4%) and Helmerich & Payne (HP +1.9%).
Tue, Jun. 2, 6:15 PM
- Half a loaf is better than no loaf at all, as investors pushed shares of offshore drilling contractors to strong gains in today's trade after Hercules Offshore (NASDAQ:HERO) said Saudi Aramco would keep three rigs working but at roughly half the previous dayrates.
- Cowen analysts offer a rather negative take, saying rate reductions were expected, but given the quality of its rigs and its difficult negotiating position, HERO received the harshest rate reductions among its peers; also while competitor contracts will revert to their original dayrates in early 2016, HERO’s rigs will be on the lowered rate through the end of 2016.
- Meanwhile, Atwood Oceanics (NYSE:ATW) received a month-long extension on one of its rigs, which prompts Susquehanna to boost its 2015 EPS outlook to $7.40 from $7.37 but maintain its Neutral rating and $32 stock price target.
- In today's regular session: HERO +6.1%, ATW +2.5%, RIG +3.7%, SDRL +4.2%, NE +4.7%, RDC +5.1%, DO +4.2%, ESV +4.5%, HP +2.5%, PKD +3.3%.
Mon, May 11, 11:49 AM
- It's time to "take profits and... a summer vacation" in onshore oil services stocks such as National Oilwell Varco (NOV -2.8%), Weatherford International (WFT -2.7%), Patterson-UTI Energy (PTEN -3.7%) and RPC (RES -4%), Citigroup's Scott Gruber says.
- The onshore service stocks are discounting at least 400 horizontal rigs returning to service, yet quick-to-market tight oil means supply concerns likely will manifest as soon as the rig count begins to rally, the firm says.
- Citi downgrades NOV to Sell from Neutral given risk of backlog cancellations, continued EPS compression and valuation, and believes a recovery multiple is not warranted for the stock until backlog growth resumes; the firm also cuts RPC to Sell, reiterates its Sell rating on Helmerich & Payne (HP -2%), and lowers WFT and PTEN to Neutral from Buy.
Thu, May 7, 11:59 AM
- UBS says it's time to buy the big three names in land drilling - Helmerich & Payne (HP -2.6%), Nabors Industries (NBR -4.2%) and Patterson-UTI Energy (PTEN -2.6%) - as they take market share from the weaker companies while lower oil prices wash out the weaker hands.
- The firm also notes the group is not taking the public relations beating that some of the fracking giants are from the likes of David Einhorn.
- The three companies are taking it on the chin today, but they recently reported better than expected Q1 results on improved rig revenues, even as revenues typically fell due to reduced rig activity.
Mon, Apr. 27, 5:30 PM
- Land drilling activity cuts that began late last year are nearing an end with the bottom likely this quarter, Goldman Sachs says as it upgrades land drillers Patterson-UTI Energy (NASDAQ:PTEN), Nabors Industries (NYSE:NBR) and Helmerich & Payne (NYSE:HP) to Buy from Neutral.
- Goldman believes the sharp reduction in rig activity - with rig declines reaching 900-plus rigs on average in Q2 2015 v- has started the self-correcting mechanism in oil supply, and that oil production should flatten in Q2 and is unlikely to grow Y/Y by Q4; the firm now expects the U.S. land rig count to increase by ~430 rigs by year-end 2016, with the horizontal rig count increasing by nearly 300 rigs.
- Earlier: Helmerich & Payne upgraded to Buy from Neutral at Goldman
Mon, Apr. 27, 10:58 AM
- Helmerich & Payne (HP +3.2%) is upgraded to Buy from Neutral with an $85 price target, raised from $51, at Goldman Sachs, which notes HP's high exposure to increased demand for high-spec U.S. land rigs in 2016.
- The firm foresees 1,500HP or larger rigs to see the sharpest increase in utilization, increasing from 62% currently to the mid-80% range by late 2016, and that HP will be the biggest beneficiary of the demand pick-up since it controls nearly 50% of such available rigs.
- Goldman also likes HP's pristine balance sheet, with estimates 2016 net debt/capital of less than 1% vs. a 20% average for land drilling peers, and projects HP to generate substantial free cash flow in 2016 which can be used for dividend increases or share buybacks.
Thu, Apr. 23, 6:12 AM
Wed, Apr. 22, 5:30 PM
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Thu, Apr. 16, 10:58 AM
- Ensco (ESV -4.8%) reveals in its April fleet status report that it agreed to lower dayrates on seven of its jackups working for Saudi Aramco in the Middle East, with reductions ranging 10%-20% and an average decline of 15% across the seven rigs.
- Cowen analysts believe further rate negotiations are ongoing and could affect other operators with units contracted to Saudi Aramco, noting that Rowan (RDC -4.2%) may be the most exposed since it has nine rigs currently working with Aramco; RDC secured three-year contract extensions in Sept. 2014 on four of the jackups, which could see reductions, as well as four units currently under negotiation extensions.
- Other contractors with units working for Aramco are Noble Corp. (NE -4.9%) with four units, Hercules Offshore (HERO -3.9%) with two (after the termination of the Hercules 261), and Seadrill (SDRL -3.9%) with three.
- Other offshore drilling contractors also are lower: RIG -3%, ATW -2.3%, DO -4.1%, HP -2.7%, ORIG -2.5%, PACD -4.2%.
Helmerich & Payne Inc is engaged in contract drilling of oil & gas wells for others in the ownership, development & operation of commercial real estates. Its business comprises of three reportable segments: U.S. Land, Offshore & International Land.
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